Concept: Credit Debt Facility on Hive: Draft Number one.
Ideas come to me sometimes in the middle of other or while work, perhaps triggered by some connection between the work and a problem we were thinking about another time. I admire the decentralized finance project called Makerdao before, Sky now, and how it works, along with it's limitations or challenges being on the Ethereum blockchain, with Ether fees being high and transaction times being short. It occurred to me that there nay be a simpler way to do this entire process.
Trustlessness, I think this is a good starting point; Do we need trust less smart contracts, when we have an open ledger ?
To further clarify what I am thinking: We are a blockchain. All transactions are recorded on the blockchain. And posts can be made to explain documented transactions between individuals, which are recorded on the blockchain, and memos can be added which specifiy exactly what each transaction was for, so there is no lack of clarity.
Example Loan Outline:
So if I buy or save a thousand HBD Hive Backed Dollars, I could start providing a credit debt facility services, similar to Maker Dao, now Sky, here on the Hive Blockchain.
We have the three currencies we need for a credit debt facility on Hive; hive. hive power and hive backed dollars.
I envision the loan process like this.
Customer #1 deposits 100 Hive in the Hive Bank.
Hive Bank will loan you 50% of the value of your deposited funds, of hive, in hive backed dollars, through this calculation: the maximal loan amount in hive backed dollars is the current dollar value of hive x 0.5.
The maximal loan amount is then issued as hive backed dollars.
The loan to collateral ratio is 50%.
So The Hive Bank will loan 50% of the value of deposited collateral.
All you have to do is pay the hive dollars back, along with a small fee of 0.5% and your hive will be returned to you.
Example Loan Example:
Based on the smart contract dictated relation ship of hive backed dollars to hive, on the hive blockchain, one hive backed dollar equals one USD worth of hive.
If one hive is currently worth 0.20 USD.
Then five equal hive equals one USD.
Therefore a deposit of 100 Hive at 0.20 USD is equivalent to 20 HBD.
And the maximum loan which can be made is 10 HBD.
So if you wanted to accumulate hive, but needed money, you could borrow 10 - HBD per 100 Hive you deposit in the hive Bank.
now you have 10 HBD to spend as you see fit, and the bank has your Hive as collateral.
ALL you have to do to get your hive back is pay back the loan of 10 hbd and pay the 0.5% fee to withdrawal your hive from the hive bank.
All depositors receives the following:
A written receipt in the form of a transaction record and a written post recognizing the deposit.
The loan is added to the Hive ledger which is instantly updated in the wallet.
The Hive Bank makes a profit of 0.5% interest on the loan, and keeps all curation generated by the deposited funds.
The Hive Bank keeps all funds in the Hive Deposit Account.
All deposits will be noted in memo’s which are permanent on the blockchain.
Summary
Summary of Concept
The loan to collateral ratio is 50%.
So The Hive Bank will loan 50% of the value of deposited collateral.
So a deposit of 100 Hive, with Hive USD value of 0.20 or 0.20 HBD has a net value of 20 HBD.
So at 20 HBD a 50% loan to collateral value loan will net you 10 HBD as the maximal loan, you could take a smaller amount, but that is the maximal amount.
All you have to do is pay the hive dollars back, along with a small fee of 0.5% and your hive will be returned to you.
This aloows you to have money to spend, without selling your hive.
So, if Hive appreciates in value over one year or two years, you will still share in that appreciation, even though you borrowed against it's value, because you still own the hive.
So if Hive doubles in value and your hive is worth 200 dollars, that complete value will belong to you.
All you have to do is pay the hive dollars back, along with a small fee of 0.5% and your hive will be returned to you.
Important features of Hive Bank or How the Hive Bank works.
The Hive Bank has two accounts:
Hive Bank Deposit Account; holds all deposited hive, and all hive in this account is powered up or staked as hive power.
Hive Bank Reserve Account holds the cash equivalent of all hive deposited in the deposit account, and it is not powered up.
This means the Hive Bank can always pay depositors who request wihthdrawals immediately.
All you have to do is pay the hive dollars back, along with a small fee of 0.5% and your hive will be returned to you.
This means that each dollar deposited in the deposit account is backed by a dollar in the reserve account.
This means that depositors don't have to wait for the 13 week power down time of hive power to get their deposits back.
This means that IF the Hive Bank deposit account is hacked or compromised depositors can still get 100% of their money back, from the reserve account.
This means the Hive bank can never become insolvent because all the depositors want their money back the same day, because the Hive bank will always hold enough hive to pay 100% of the depositors withdrawals.
In theory because of this bank characteristic there should never be a bank failure due to panicked wiithdrawals because the hive bank will always have enough hive on hand to pay depositors. So there is no reason to panic.
The depositors don't have to take the hive bank representatives word for it, they can look up the banks deposits and ledger on the blockchain.
The hive bank makes it's money on loan fees alone, not investing your money.
Because the loan fees are low, you can move money in and out cheaply.
Your money is always accounted for here.
Feedback
Ask me Anything AMA
How will the bank be capitolized?
The bank will be 100% backed from the beginning.
I will start with bank capitol of 15,000 hive and will accept 10,000 hive in deposits, in increments of 100 hive with 100 hive being the miimum and 500 hive being the maximum per investor. This will allow the bank to issue 5000 ive in hbd equivalent loans and still back all deposits one to one with hive.
The bank deposits will be capped at 100 minimum deposit and 500 maximum deposit in increments of 100 hive.
Phase one will stop at 15,000 hive in deposits. deposits during phase one of the hive bank project. which will be used as to issue micro loans 100 hive to 1000 hive deposits. convert hive to hive banked dollars when loans are made.
I will stop accepting hive deposits when the amount of deposits reaches 25,000 hive.
Once the bank reaches 25,000 in deposits I will also seek out additional hive for reserves and then accept further loans.
This simplicity in operation and fee structure of the bank means risk to depositors is low, because the bank doesn't worry about the volatility of hive, because we are just holding hive, so it's price doesn't matter to the bank because the loans are fully backed. we don't need to get the hbd back until you need your hive back.
The bank will incur risk by making advances of HBD on hive we are holding, so I will need to think about what makes USDT prifitable and immulate them.
Our ecosystenm is somewhat closed and there maybe additional value to bring to hive by opening the ecosystem up to other chains somehow.
Credit Debt Facility on Hive: Draft Number one. | Ecency
